Increased Government Spending Is Our Default Setting

July 3, 2012

A learning experience about government and policy came in the 1980s, while I worked in the nation’s capital for Paul Weyrich. A founder of the “New Right,” his ardent conservatism was tempered by an appreciation for, and understanding of, differing views.

Weyrich was usually fair in assessing the motivations of others, perhaps due to the years he spent in television, radio, and print journalism.

One day, he asked me to accompany him to a meeting on K Street, in northwest Washington.

We went to see a fellow whom Weyrich described as a friend of many years—albeit one of the “K Street bandits.” That was, and is, the amalgamation of lobbying groups, law firms, and others involved with the “permanent government”—those who will always be there, regardless of who comes and goes in the presidency, Congress, or even judiciary.

Weyrich ruefully observed that while the cast of characters—individuals and firms—may evolve over time, “K Street is forever.” Not all K Street people were or are personally corrupt, but they work in a system that seems corrupt. Regardless of surface public sentiment, government grows—whether through direct appropriations to agencies or “grants” to non-profits and public-private partnerships—generation after generation.

Paul’s relationships were eclectic, even diverse. He had asked the gray-haired member of the K Street power structure to review a proposed law hundreds of pages in length. He wanted to understand the substance of the regulatory bill, its likely impact on the economy, and both indirect and direct costs to taxpayers. Paul had promised protection of the man’s identity, wanting an absolutely candid assessment of the bill, which a powerful politician had asked Paul to support.

Weyrich and the old fellow did the talking, while I did the learning. Bottom line of the discussion came when the K Street guru, idly turning pages of a massive three-ring binder, smiled confidently and said, “You’re right, Paul. This is an absolutely horrible bill.” He paused for effect, and then added, “But it will be great for business.”

He meant great for the lobbying and litigation business, not for job creation and economic growth. Weyrich replied that he could not support the measure, and would stay out of the fight. The old guy agreed that was the right thing to do.

Republicans took control of Oklahoma state government in 2010, determined to reduce spending, right-size government, and cut taxes.

Eighteen months after Governor Mary Fallin came to office with a Republican House and Senate, the Legislature failed, rather dramatically, to reduce income taxes. Fallin signed legislation increasing state government spending by $321 million.

Intelligent, hard-working, and well-meaning people who want government to grow thwarted the legislative and executive majority of representatives for an electorate of intelligent, hard-working, and well-meaning people who want government to be restrained and taxes to be lower. Neither faction is delusional, but one might better understand than the other the dynamic of modern governance.

Upon reflection, the 2012 legislative session’s outcome was no surprise. Despite Republicans having 70 percent of the seats in the House, and two-thirds of the seats in the Senate, and 100 percent of the statewide elective offices, defenders of the status quo had a tactical advantage from the start.

To understand why, I commend to your attention a very important article, “Facing Up to Big Government,” by University of Pennsylvania political scientist John J. DiIulio, Jr. in the Spring 2012 issue of National Affairs. As DiIulio makes clear, big government is bigger than you think.

Beyond those employed directly by the state are the workers of businesses and non-profit organizations paid or subsidized by one or more levels of government to help administer programs in defense, homeland security, health care, consumer-product safety, environmental protection, and so on. Indeed, big government in America involves far more than government: It involves Big Inter-Government (BIG) plus BIG’s Private Administrative Proxies (PAP) and their non-government but tax-paid employees. Let’s call it BIG PAP for short.

Increased government spending is the default setting of modern political culture, both in Washington and in Oklahoma City. Oklahoma City doesn’t have a “K Street,” but it does have well-organized and well-funded associations more comfortable with the status quo of government growth than with economic liberty.

Proposals to cut spending come and go, but the permanent government and its allies in the government-dependent private sector go on forever.

In an era where distrust of government is high, and voters long (theoretically) for restraints on taxes and spending, government spending at all levels has risen. It took an unwelcome Great Recession to moderate the pace of growth, but the direction thus far remains inexorable.

This is so because while all sorts of people understand that government’s present and projected unfunded liabilities are unsustainable, there are powerful lobbies for virtually every specific government program.

In the months just past, a death knell for significant tax reform tolled when legislators refused to reform transferable tax credits. That came early in the session, several weeks after behind-the-scenes lobbying broke into the open as advocates of the status quo delivered an early Christmas present to those who believe state government is best situated to pick economic winners and losers.

In a letter, the State Chamber, joined by the Oklahoma City and Tulsa chambers, opposed the most important policy proposals outlined in the long months of work by the Task Force on State Tax Credits and Economic Incentives. Chamber leaders opposed repeal of transferability, requirements for job creation or retention guarantees for incentive programs, and authority for the state auditor to review and assess incentive programs.

As Winston Churchill might put it, the Chamber letter wasn’t the end of dreams for income-tax reduction, but it was the beginning of the end.

The rest of the story flowed rather methodically to its conclusion.

OCPA continued to advance ideas on state-government spending (much in the same way that former OCPA trustee Tom Coburn now advances ideas on national-government spending). Early in the session, OCPA laid out more than $800 million in waste and inefficiencies in a widely circulated “green sheet.” Then, several Republican members of the House unveiled $500 million in potential savings. One by one those proposals died. Under lobbying pressure and demands to return to peak spending levels, doing nothing was more attractive to individual legislators than doing something. OCPA’s Jonathan Small responded to questions and unveiled a list of “low-hanging fruit”—$190 million in spending reductions or policy changes that would yield savings.

However, the Legislature limited itself to tinkering, nipping and tucking here and there, and institutionalizing modest administrative and technology reforms that might, indeed, yield true savings over time.

Promises from 2010 of spending restraint, and the explicit promise in February 2012 of a Reagan-style tax cut—with the governor saying she would seek a “game-changing” transformation of policy leading eventually to abolition of the income tax—became an elusive dream by May.
In the end, state officials held celebratory bill signings to tout measures increasing government spending on transportation, higher education, and human services.

DiIulio contends it is time for some modest steps that might, just might, slow down the juggernaut of government growth and buy time before that day of reckoning that virtually every economic analyst now believes is coming. In essence he is pleading to stave off the day of debt reckoning, hoping that the nation will sooner or later be blessed with Madisonian statesmen who will educate and lead Americans.

What’s happening to Republicans at the state Capitol brings to mind another story, this one from M. Stanton Evans, the venerable former Indiana newspaper editor who went to Washington decades ago and never lost his Old Right perspective.

One day over lunch in 1983, two years after the Reagan tax cuts but early in an ultimately losing battle to limit federal spending significantly, Stan reflected:

“In 1980, thousands of conservatives flocked to Washington full of dreams and idealism, determined to clean out the cesspool of waste, fraud, and abuse, to drain the swamp of big government. Three years later, many of them have decided Washington is not really a cesspool; it’s more like a hot tub.”

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com.

BIG-PAP and the Chambers

In a May 15 editorial, The Wall Street Journal chastised Oklahoma “Chambers of Commerce, teachers’ unions, and welfare groups” who fought against income-tax reductions.

At first it may seem surprising—at least to those who haven’t read Timothy P. Carney’s book The Big Ripoff: How Big Business and Big Government Steal Your Money—that chambers of commerce would fight against tax cuts. But things become clearer when one realizes just how many members of various chambers of “commerce” are in fact dependent on government [visit AccountAbilityOK.com and OpenBooks (ok.gov/okaa) for a partial glimpse at how much government money is going to various chambers]. Indeed, the Oklahoma City and Tulsa chambers recently teamed up with the Oklahoma AFL-CIO and five other labor unions (among others) to sponsor an event disparaging tax cuts and arguing for more government spending.

The 2012 membership directory of the Greater Oklahoma City Chamber includes any number of associations (e.g., the Oklahoma State School Boards Association), non-profit service agencies, and social service organizations which depend on government money. Not to mention businesses in the BIG-PAP complex which are joined at the hip with government. And that’s not even counting the outright tax consumers (here’s a partial listing).

Metro Technology Centers
Beauty Academy
Metro Career Academy
Aviation Career Campus
Metro Downtown at the Montgomery
South Bryant Campus
Francis Tuttle Technology Center
Moore Norman Technology Center
Franklin Road Campus
So. Penn Campus
OU Career Services
OSU Office of Career Services
Central Oklahoma Transportation and Parking Authority
Department of Veterans Affairs Medical Center
OU Cancer Institute
OU Medical Center
Children’s Hospital at OU Medical Center
OU Medical Center Edmond
Oklahoma City Housing Authority
Belle Isle Library
Bethany Library
Capitol Hill Library
Choctaw Library
Del City Library
Ronald J. Norick Downtown Library
Edmond Library
Metropolitan Library System
Midwest City Library
Ralph Ellison Library
Southern Oaks Library
The Village Library
Warr Acres Library
Oklahoma Historical Society
Oklahoma History Center
Oklahoma City Parks and Recreation Dept.
Mike Monroney Aeronautical Center–FAA
ASTEC Charter Schools
Dove Science Academy
KIPP Reach College Prep
Oklahoma City Public Schools
Oklahoma School of Science and Mathematics
Putnam City Schools
Santa Fe South Schools, Inc.
The Academy of Contemporary Music at UCO
East Central University
Center for Executive and Professional Development (OSU)
Langston University
Langston University at Oklahoma City
Langston University School of Physical Therapy
OUHSC Office of Alumni and Development
Oklahoma City Community College
Oklahoma State University
Oklahoma State University–OKC
Rose State College
Small Business Development Center–Langston University
University of Central Oklahoma
University of Oklahoma
University of Oklahoma Athletics
University of Oklahoma College of Medicine
University of Oklahoma College of Nursing
University of Oklahoma Health Sciences Center
Crime Stoppers–Oklahoma City Police Dept.
OSU-OKC Farmers Market

—Editor